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Credit Agricole See BoJ Comments Making Markets Wary of Hawkish Dec Shift

JPY
  • On the moves in USD/JPY (triggered today by recent rounds of BoJ communique resulting in speculation surrounding BoJ policy normalisation on top of the poorly received 30-Year JGB auction), Credit Agricole specifically flag Himino’s comments yesterday where he hinted that a shift to positive rates would not lead to economic catastrophe. Adding to the theme, Ueda overnight discussed the options for raising rates when the BoJ eventually decides to do so.
  • They write that the fact that the Governor and Deputy Governor have begun thinking and talking in public about an exit from NIRP has led the market to become nervous about a potential hawkish shift by the BoJ at the Dec19 meeting.
  • Until then, global yields are likely to be the stronger driver of the JPY, especially US non-farm payrolls on Friday as well as US and Eurozone CPI data and the FOMC and ECB meetings next week, and also warn that GDP and labour earnings data are unlikely to add to the case for the BoJ ending NIRP.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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